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The world's largest antipoverty organization advocates a market-oriented approach to job creation and poverty alleviation, putting poor borrowers on a path to prosperity by giving them a “business in box.”

Sir Fazle Hasan Abed, founder and chairperson of BRAC

Financial services alone are not sufficient to break the bonds of poverty.

Valladolid, Spain (PRWEB)November 16, 2011

BRAC, the world’s largest development organization, lays out its “microfinance plus” approach to defeating global poverty at the Global Microcredit Summit 2011 in Valladolid, Spain, this week. Presenting BRAC’s strategy to over 2,000 delegates at the annual microfinance conference, Sir Fazle Hasan Abed, the founder and chairperson, advocates a market-oriented approach to job creation and poverty alleviation that puts poor borrowers on a path to prosperity by giving them a “business in box.”

It’s an approach that development experts call “micro-franchising.” Working in poor communities, BRAC develops sustainable business models that can be easily replicated, creating networks of self-employed micro-entrepreneurs who earn extra income by delivering vital services that achieve a social good.

More than 137.5 million of the world’s poorest families received a microloan in 2010, an all-time high, according to the Microcredit Summit Campaign. BRAC itself reaches over 8 million borrowers, a number rising steadily thanks in part to this year’s launch of bKash Limited, a mobile financial service provider in Bangladesh and a subsidiary of BRAC Bank, the organization’s bank targeting small businesses.

But development organizations should think beyond microfinance to make strides against poverty, BRAC’s founder says. “Financial services alone are not sufficient to break the bonds of poverty,” says Abed, who launched BRAC in Bangladesh in 1972. In a paper presented at the conference, Abed explains how BRAC has combined microfinance with agricultural services to improve rural livelihoods and food security in Bangladesh and around the world.

Now in 10 countries, BRAC has built a global network of 150,000 micro-franchised entrepreneurs providing services in agriculture, poultry, livestock and health. Abed calls it a “holistic, sustainable, market oriented approach” to poverty alleviation that uses microloans, training and branding, while offering borrowers low-cost access to inventory, efficient distribution systems and continuous support.

“BRAC provides the branding, inventory and training to the micro-entrepreneurs, who in turn provide training and product to BRAC microfinance clients and others in the villages where BRAC operates,” writes Abed and co-authors Dr. Mahabub Hossain, Susan Davis, and Rod Dubitsky in the paper, “Using Microfinance Plus Agricultural Services to Improve Rural Livelihoods and Food Security,” which will appear in the forthcoming volume New Pathways out of Poverty (Sterling, Va.: Kumarian Press).

“The entrepreneurs, in turn, earn income by selling the goods BRAC provides at a mark-up. For example, BRAC entrepreneurs earn between $15 and $20 per month in the provision of poultry vaccination services. Farmers in turn get a valuable service and expect to benefit by enjoying a material drop in poultry mortality. Such a ‘Business in a Box’ not only provides a valuable service and income, it is a more sustainable model than other programs that provide vaccines free (which may not be available to all farmers and may not be reliably available).”

Micro-franchising has proved useful in bridging the last mile in the delivery of vital goods and services, says Susan Davis, the president and CEO of BRAC USA and one of the paper’s co-authors. “A poor person can find a bottle of Coca-Cola today anywhere in rural Africa – but not mosquito bed nets and condoms,” says Davis. “Distribution is a real challenge that organizations never speak about, but it is one of the most critical hurdles in reaching the poor. Microfinance institutions can effectively bridge this gap. For instance, BRAC reaches more than 8 million women, every week – at their doorstep, in providing credit and financial services. Can you imagine the potential of a sustainable distribution model like this?”

BRAC began its experiments with micro-franchising decades ago when it realized that merely lending to the poor would not be enough to lift them out of poverty. Dramatic improvement would come, however, with better access to markets, fairer prices, knowledge transfer and higher quality inputs like high-yield seeds and new breeds of chickens. BRAC created agricultural enterprises and services to enhance the business prospects of its microfinance borrowers and other members of poor communities. It used the same approach in providing health care, raising an army of “community health promoters” to provide simple but vital services in slums and villages, like de-worming medication and oral rehydration solution to treat diarrhea in young children.

Though largely unknown outside the international development community, experts have long noted the size and scope of BRAC’s success in Bangladesh. Paul Collier, author of The Bottom Billion, has called BRAC “the most astounding social enterprise in the world.” The Economist called it not only the largest but “one of the most businesslike” nongovernmental organizations in the world.

Today, BRAC is scaling up its micro-franchising approach outside its native Bangladesh. Through a ground-breaking $45 million partnership with The MasterCard Foundation, BRAC has built a network of 3,500 micro-franchised entrepreneurs in Uganda providing critical livelihood and health services to the poor. It currently operates in ten countries: Afghanistan, Bangladesh, Haiti, Liberia, Pakistan, Sierra Leone, South Sudan, Sri Lanka, Tanzania and Uganda.

About BRAC

BRAC, formerly the Bangladesh Rural Advancement Committee, is a global development organization dedicated to alleviating poverty by empowering the poor to bring about change in their own lives. BRAC’s holistic approach aims to achieve large scale, positive changes through economic and social programs that enable women and men to realize their potential. BRAC was launched in Bangladesh in 1972 and today reaches more than 138 million people in Africa and Asia through its programs that address poverty by providing micro-loans, self-employment opportunities, health services, education and legal and human rights services. Learn more at http://www.bracusa.org.

About the Microcredit Summit Campaign

The Microcredit Summit Campaign is a project of RESULTS Educational Fund, a U.S.-based advocacy organization committed to creating the will to eliminate poverty. The Campaign was launched in 1997 and, in 2007, surpassed its original goal of reaching 100 million of the poorest families, providing credit for self-employment and other financial and business services. The Global Microcredit Summit 2011 is held November 14-17 in Valladolid, Spain. http://www.globalmicrocreditsummit2011.org